Strategic alliance

The relationship between Singapore and China is a story of commerce. Trade lanes were established in the Tang Dynasty (618 to 907 AD) and the flow of goods and capital has never stopped. There are myriad connections between the two countries today, ranging from a new wave of mainland migrants to socio-economic development models.

As China began to open up in the early 1980s, Singapore was already on its way to becoming part of the Asian economic “miracle” of the 1990s. Singapore invested heavily in China throughout that decade. Its spending peaked in 1998 at US$3.5 billion, according to research by Zhao Hong, a professor at Xiamen University ’s research school of Southeast Asian studies. Singaporean firms were using China as a production base, setting up joint ventures and projects.

By comparison, Chinese direct investment in Singapore was just US$224 million between 1995 and 2004.

Now though, the bilateral relationship is more balanced. Increasingly, Chinese enterprises have become more involved in Singapore. One phenomenon has been Chinese firms floating so-called S-shares on Singapore’s stock exchanges. There are now more than 140 Chinese firms listed in the island-state.

China also claims to have modeled its sovereign wealth fund, China Investment Corp, on Temasek, one of the Singapore government’s two investment arms.

Both Singapore and China have successfully juggled explosive economic growth with political continuity and robust social stability. However, they are widely critized by activist groups for their human rights records. Have they managed to deliver prosperity without liberty?

“Singapore is a bit of a model to dictatorships all over the world as to how you can run a modern capitalist economy without relinquishing power,” said Michael Barr, a professor who researches Singapore at Australia’s Murdoch University. “How consciously the Singapore model is followed [in China] I don’t know, but it is certainly an exemplar that it can be done.”

Copycat controls
Barr is reluctant to make comparisons because he sees Singapore as too small to be relevant as a model for economic development. But he accepts that China is looking to its neighbor for pointers “on how to use the law as a tool of political and social control, while allowing the relatively impartial rule of law in the commercial and purely civic spheres.”

China-Singapore comparisons also stumble over the notion of prosperity and what it means in each country.

“The main difference is that prosperity in China is very unevenly distributed as evidenced by the rapid increase in its Gini coefficient [a measure of a country’s wealth disparity],” said Kellee Tsai, a professor of political science at Johns Hopkins University and author of a book about China’s private sector.

Categorizing China’s development model is an ongoing debate. Is it, like Singapore, Taiwan and Korea, one of the countries that followed Japan’s path to industrialization? This model contains the tantalizing possibility that China’s economic growth will culminate in democracy and greater personal liberties.

What is for sure is that China and Singapore are becoming more enmeshed over time. In Beijing, a Raffles Hotel, home of the Singapore Sling, has just opened. Shanghai has a Raffles City mall, developed by Singapore’s Capitaland.

Indeed, even some of Singapore’s Olympics contingent heading to Beijing in August are naturalized citizens – they were originally Chinese nationals.

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